By giving
illegal aliens a tax identification number and allowing them to file tax
returns as if they were citizens or legal immigrants, the IRS, according to the
Treasury Department Inspector General for Tax Administration, was opening the
door for illegal aliens to receive tax benefits Congress had intended for U.S.
citizens.
(CNSNews.com) -
The question of whether to legalize illegal aliens and put them on a pathway to
citizenship may be the most controversial legislative issue facing the U.S.
Congress this year.But, according to the Treasury Inspector General for Tax Administration (TIGTA), seventeen years have already passed since the Internal Revenue Service made its own “policy decision” to “’legalize’ illegal aliens.”
That policy,
made those many years ago, not only determined that the IRS would treat illegal
aliens the same as legal immigrants and U.S. citizens, but also that the IRS
would not hand over to federal immigration authorities information about
employers who appeared to be hiring large numbers of illegal aliens and about
illegal aliens who filed false documents with the IRS.
As a result of
the IRS's policy, by 2010, according to TIGTA, the service was paying out $4.2
billion in refundable "Additional Child Tax Credits" to illegal
aliens. In 2011, according to TIGTA, the IRS would pay more than $46 million in
tax refunds to what theoretically were 23,994 illegal aliens who all used the
same address in Atlanta.
The story
starts in 1996, when Democrat Bill Clinton was president, and the Republicans
controlled Congress.
On May 2, 1996,
the Senate voted 97 to 3 to approve the Illegal Immigration Reform and
Immigration Responsibility Act. This vote inspired Sen. Ted Kennedy to go down
to the Senate floor and proudly proclaim that the Senate had taken bipartisan
action to stop illegal immigration and protect American workers.
“This
legislation, I think,” said Kennedy, “will be extremely important and, I
believe, effective in stemming the tide of illegals, not just because of the
expansion of the border patrols, although that will have some effect, and not
just because of the increased penalties in smuggling, as all that will have an
effect; it will have an important impact in helping American workers get jobs
and be able to hold them and have the enhanced opportunity for employment.”
Four months
later, on Sept. 25, 1996, a House led by Speaker Newt Gingrich approved the
bill 305 to 123. President Clinton signed it on Sept. 30, 1996.
Section 642 of
this law said that no other law or official could bar any agency or official
from providing information about illegal aliens to the Immigration and Naturalization
Service--the agency then responsible for enforcing immigration law.
“Notwithstanding
any other provision of federal, state, or local law, a federal, state, or local
government entity or official may not prohibit, or in any way restrict, any government
entity or official from sending to, or receiving from, the Immigration and
Naturalization Service information regarding the citizenship or immigration
status, lawful or unlawful, of any individual,” said the law.“Notwithstanding any other provision of federal, state, or local law,” it said, “no person or agency may prohibit, or in any way restrict, a federal, state, or local government entity from doing any of the following with respect to information regarding the immigration status, lawful or unlawful, of any individual: (1) Sending such information to, or requesting or receiving such information from, the Immigration and Naturalization Service. (2) Maintaining such information. (3) Exchanging such information with any other federal, state, or local government entity.”
On May 29,
1996—after this bill passed the Senate but before it passed the House—the IRS
issued a regulation that contradicted it.
This regulation
said the IRS would grant what it called Individual Taxpayer Identification
Numbers (ITINs) to aliens who did not qualify to work in the United States and
did not qualify for Social Security Numbers. The IRS had three basic
requirements for people receiving these numbers: 1) they had to be an alien, 2)
they could not be qualified to work in the United States or have a Social
Security Number, and 3) they owed taxes in the United States.
In issuing this
regulation, the IRS said Section 6103 of the Internal Revenue Code would apply
to the aliens it granted these ITINs. Section 6103 says the IRS must keep tax
information confidential and, with a few exceptions, may not share that
information with other government agencies.
In September
1999, the Treasury Inspector General for Tax Administration, which has
oversight over the IRS, published an audit report
on the ITIN regulation. It was titled, “The Internal Revenue Service’s
Individual Taxpayer Identification Number Program Was Not Implemented in
Accordance with Internal Revenue Code Regulations.”
The IG pointed
out that the IRS’s claim that it could issue ITINs to illegal aliens and then
decline to provide information about those illegal aliens to the federal
immigration enforcement agency—then called the Immigration and Naturalization
Service (INS)--contradicted the terms of the 1996 immigration reform law.
“The IRS
provides disclosure protection to illegal alien applicants,” said the IG. “The
Congress has clearly stated how the federal government is to communicate between
agencies concerning illegal aliens. The Illegal Immigration Reform and
Immigrant Responsibility Act of 1996 (the Illegal Immigration Reform Act)
states that information concerning illegal alien status should be provided to
the Immigration and Naturalization Service (INS) notwithstanding any other law.
[Bold in the original.]
“However, in
the ITIN regulations issued on May 29, 1996, the IRS states, ‘Generally, tax
return and tax return information are confidential, as required by 26 USC
6103,’” said the IG. “Therefore, the IRS assurance of anonymity seems to be in
conflict with a federal statute.”
The IG
determined it was the IRS’s deliberate intention to withhold information about
illegal aliens to the INS.
“IRS management
and the Office of Disclosure Litigation indicated that the IRS intentionally
will not provide information to the INS,” said the IG report. “The rationale
for this policy is that the Illegal Immigrant Statute is a ‘general’ statute
and does not change IRC Section 6103.”
By giving
illegal aliens a tax identification number and allowing them to file tax
returns as if they were citizens or legal immigrants, the IRS, according to the
IG, was opening the door for illegal aliens to receive tax benefits Congress
had intended for U.S. citizens.
“Some of the
tax advantages that are being realized by illegal aliens treated as residents
include receiving spousal exemptions, standard deductions, and even some
erroneous earned income credits,” said the IG.
In sum, the IG
concluded, despite the 1996 immigration reform law, the IRS had made its own
policy decision to simply “legalize” illegal aliens.
“The Internal
Revenue Service (IRS) made a policy decision to issue IRS Individual Taxpayer
Identification Numbers (ITINs) to illegal aliens so tax filing obligations
could be met,” said the IG. “This IRS policy, to ‘legalize’ illegal aliens,
seems counter-productive to the Immigration and Naturalization Service (INS)
mission to identify illegal aliens and prevent unlawful alien entry.”
In a November
2002 followup report,
the IG said the IRS’s policy of issuing ITINs could be helpful to terrorists.
“Based on
national security risks, the ITIN process is an area of vulnerability and
concern,” said the IG. “With an accepted form of government-issued
identification like an ITIN, it is easier for terrorists and their sympathizers
to operate in an open society while planning hostile actions.”
In January
2004, in response to concerns raised by then-Senate Finance Chairman Charles
Grassley (R.-Iowa), TIGTA published another report about the problems caused by
the IRS’s policy toward illegal aliens.
This report
revealed that the number of tax returns filed by “unauthorized” aliens using
ITINs was increasing, raising concerns about illegal aliens committing identity
theft—by using stolen Social Security Numbers—and raking in refundable tax
credits, such as the Additional Child Tax Credit.
On July 18,
2003, TIGTA’s Assistant Inspector General for Audit Gordon C. Milbourn sent a
memorandum to then-IRS Commissioner Mark Everson citing TIGTA’s concerns.
“Specifically,
unauthorized resident aliens filing U.S. Individual Income Tax Returns (Form
1040) identified with an ITIN would qualify for accelerated disbursements of
the Child Tax Credit (CTC) and the Additional Child Tax Credit (ACTC),”
Milbourn wrote.
He then
restated TIGTA’s concern that issuing ITINs to illegal aliens conflicted with
congressionally enacted immigration law—this time citing the 1986 amnesty law.
“The presence
of the Form W-2 issued in the filer’s name indicates that employment was
secured,” wrote Milbourn. “Therefore, these resident aliens were apparently
employed without authorization. Consequently, we believe that the IRS is at
risk of conflicting with the Immigration Reform and Control Act of 1986, which
was designed to prevent unauthorized resident aliens from working in the U.S.”
Then Milbourn
noted that tax returns that had a Form 1040 using an ITIN given to an illegal
alien but that reported income on a W-2 using a Social Security Number
indicated that the alien in question was not only working illegally in the
United States but may be committing identity theft.
“Some
paper-filed returns appear to have been submitted to the IRS with inconsistent
identification information, since the Form 1040 showed an ITIN and the filer’s
Form W-2 showed and SSN,” wrote Milbourn. “This SSN often belonged to another
person, indicating potential identity theft.”
In its January 2004
audit report TIGTA noted that it was a felony for someone to use
someone else’s Social Security Number or a fake one. The report also noted that
the apparent misuse of Social Security Numbers was not uncommon on tax returns
filed by aliens using ITINs.
“The Social
Security Act provides that whoever, with the intent to deceive, falsely
represents a number to be his or her SSN when, in fact, that number was not
assigned to that person, shall be guilty of a felony and subject to a fine,”
said the report.
“Government
agencies reported that hundreds of thousands of unauthorized resident aliens
have used fraudulent documents, including Social Security cards to obtain
employment,” said the report.
“Unauthorized
residents submitted to the IRS an estimated 309,000 paper filed tax returns
with an estimated 354,000 SSNs on Forms W-2,” said the report. “These Forms W-2
included 265,000 SSN that are assigned by the SSA to other individuals.”
The report also
said they included 89,000 Social Security Numbers that the SSA had never assigned
to anyone.
TIGTA noted
that SSA Inspector General James G. Huse had testified in Congress that the
misuse of Social Security Numbers had helped the Sept. 11, 2001 terrorists.
“The Inspector
General stated that improperly obtained SSNs were a factor in the terrorists’
ability to assimilate themselves into American society while they planned their
attacks,” said the report. “The events of Sept. 11, 2001 heightened the urgency
of protecting the integrity of SSNs.”
This 2004 TIGTA
report recommended that IRS work with the Bureau of Citizenship and Immigration
Services and the SSA on seeking new legislation on sharing IRS information on
illegal aliens.
The IRS
reiterated its position that, as it stood, Section 6103 blocked it from sharing
information about illegal aliens with immigration enforcement.
“BCIS and SSA
are knowledgeable about the type of information collected by the IRS,” the
service said in its response to the audit. “A legislative change to Section
6103 of the code is needed before IRS can share tax information with these
agencies.”
Meanwhile, the
inspector general of the Social Security Administration began focusing on a
corollary problem: Some businesses were filing massive numbers of bad W-2 forms
for their workers—on which the names and the Social Security Numbers did not
match. Because it could not assign credit for the Social Security taxes paid on
these W-2s to an identifiable taxpayer, the Social Security Administration
credited the money to an accounting limbo called the “Earnings Suspense File”
(ESF).
“According to
SSA officials, illegal aliens may be major contributors to this problem,” said
a Feb. 7, 2000
audit report from SSA’s IG. “SSA suspects that employers in certain
high turnover industries (bars and restaurants, services, and agriculture)
compound the problem because they may knowingly hire illegal aliens with
fraudulent identification and are able to do so because there are no penalties
imposed for their actions. Consequently, those employers who knowingly accept
fraudulent documentation are free to conduct business as usual without regard
to the disruption and harm caused to SSA's customers and to unknowing
individuals whose identities are falsely used.”
The SSA said
that it had wanted to provide information from this file to the Immigration and
Naturalization Service to help the INS identify employers who were habitually
hiring illegal aliens but discovered that “privacy and disclosure limitations”
would block the SSA from sharing information with the INS.
“The INS has
oversight responsibility for illegal aliens,” said the IG. “SSA has the
capability to provide the INS with valuable leads to identify employers who
continually hire illegal aliens.
“The Agency
included a project to collaborate with the INS in its December 1997 version of
the ESF Tactical Plan,” said the IG. “The initiative was to involve SSA working
with the INS to formulate and conduct a limited review of employers who (1)
employ large numbers of immigrants and (2) experience high name/SSN error rates
on their AWRs. SSA planned to use the results of this effort to revise, if
necessary, current SSA policies, procedures, and systems as well as IRS
regulations relating to AWR requirements. Because of privacy and disclosure
limitations, the Agency determined it could not share such information with the
INS, according to SSA officials. SSA subsequently dropped the project from
later versions of the ESF Tactical Plan.”
Four years
later, in October 2004, the SSA IG published another audit
report revealing that employers who habitually filed the largest
number of no-match W-2s were concentrated in certain industries in certain
states--and that some of these employers were filing many thousands of bad W-2s
year after year.
One habitual
no-match W-2 filer was a state government agency. The most egregious was an
employer based in Illinois.
“Our analysis
of the Top 100 employers by industry determined that the highest contributors
of items to the ESF were concentrated in three industries: services,
restaurants, and agriculture,” said the SSA IG. “We found that 95 of the Top
100 employers were in 1 of these 3 industries, representing 2.6 million wage
items and over $9.1 billion in wages over the 5-year review period. Forty-three
of the Top 100 employers were in the service industry, 32 were in the
restaurant industry, and 20 employers were in the agriculture industry. Four of
the remaining employers were in the hotel/retail industry, and one was a State
agency.”
“We found that
54 of the 100 employers had registered addresses in three States – California,
Texas, and Illinois – representing almost 1.5 million wage items and over $4.8
billion in wages during TYs 1997 to 2001,” said the IG.
The Illinois
company that had the worst record had filed 131,191 no-match W-2s in tax years
1997 through 2001.
In the years
since the IRS made its “policy decision” to “legalize illegal aliens,” the
amount of money paid to illegal aliens through the refundable Additional Child
Tax Credit (ACTC) has grown.
“In TY 2007,”
said a March 2009 TIGTA
audit report, “more than 1.2 million (66 percent) ITIN filers
received ACTCs of almost $1.8 billion. The ACTC is a refundable credit
available to individuals with no tax liability.”
At that time
TIGTA recommended that Congress pass legislation to specifically bar the ACTC
from going to tax filers who do not have Social Security Numbers—i.e. aliens.
“We believe
legislation is needed to clarify whether or not refundable tax credits such as
the ACTC may be paid to filers without an SSN,” said the 2009 audit report.
“Such a legislative change could result in cost savings to the federal
government of $1.8 billion annually ($8.9 billion over 5 years). As it now
stands, the payment of federal funds through this tax benefit appears to
provide additional incentive for aliens to enter, reside, and work in the U.S.
without authorization, which contradicts federal law and policy to remove such
incentives.”
On July 7,
2011, TIGTA published yet another
audit report revealing that President Obama’s economic stimulus law
had made the ACTC more generous and that the IRS had paid out $4.2 billion to
illegal aliens through this refundable credit in 2010. The title of this audit
report: "Individuals Who Are Not Authorized to Work in the United States
Were Paid $4.2 Billion in Refundable Credits."
In July 2012,
TIGTA published a report on an
audit it had initiated because two IRS employees had alleged “that
IRS management was requiring employees to assign Individual Taxpayer
Identification Numbers (ITIN) even when the applications were fraudulent.”
In this report,
TIGTA revealed that in 2011 the IRS had sent $46,378,040 in tax refunds to what
theoretically were 23,994 unauthorized aliens using ITINs and all sharing a
single Atlanta, Ga., mailing address. Similarly, the IRS sent $10,395,874 in
refunds to what theoretically were 2,507 unauthorized aliens using ITINs and
all sharing a single address in Oxnard, California.
The same IG
report said the IRS also sent $7,319,518 in refunds to 2,706 theoretical
unauthorized aliens who all shared the same bank account.
The IG found
that the IRS sometimes granted massive numbers of ITINs to unauthorized aliens
who all used the same address. For example, according the IG, the IRS assigned
15,795 ITINs to theoretical unauthorized aliens all using the same address in
Phoenix. It also assigned 15,028 ITINs to theoretical unauthorized aliens all
using the same address in Dallas.
It has now been
seventeen years since the IRS decided it should start issuing ITINs to illegal
aliens—or, as the IG put it, made a “policy decision” to “legalize illegal
aliens.”
Immigration and
Customs Enforcement Spokesman Brandon Montgomery told CNSNews.com that SSA and
the IRS still do not provide ICE with information about no-match W-2s or ITIN
tax filings.
Since June 24,
CNSNews.com has made multiple inquiries to the IRS asking whether at any time
since TIGTA issued its 1999 audit report on the service’s ITIN policy had the
IRS begun giving federal immigration enforcement agencies information about
known or suspected illegal aliens who had applied for ITINs, or filed tax
returns using ITINs, or about employers who had filed hundreds of no-match W-2s
in a single year. The IRS has not yet responded.
Source: CNS News, July 12, 2013 - 4:28 AM http://cnsnews.com/news/article/ig-irs-made-policy-decision-legalize-illegal-aliens-ended-paying-illegals-42b#sthash.TZkWEwO3.dpuf
No comments:
Post a Comment